TORONTO -- Hudson's Bay Co. (TSX:HBC) says it will use the cash from the sale of its flagship store in downtown Toronto and an office tower to reduce its debt.
The retailer said Tuesday it has closed the deal for the Hudson's Bay store and corporate offices.
The first priority for the proceeds from the sale and lease-back transaction which was valued at $650 million will be to retire a US$300-million term loan.
The debt carries an annualized interest rate of 8.25 per cent -- relatively expensive by current standards.
The retailer will also pay down US$150 million of another term loan charging 4.75 per cent interest and the remainder will be used to reduce the balance on a revolving credit facility.
HBC announced in late January that it was selling the properties to Cadillac Fairview, an arm of the Ontario Teachers Pension Plan that operates the Toronto Eaton Centre and other retail properties.
The company has leased back the properties for a base term of 25 years, with an option to renew.
